As an investor I believe it is vital to the success of my portfolio that I understand the financial health of each of the companies that I own. With this in mind, I would like to share a fast and easy exercise that I perform for each of the stocks that I own. This exercise will give every investor the answer to my opening question…Where did my money go?
All you need for this little exercise is a company’s latest 10Q or 10K, a pen, a sheet of paper and a calculator. Can it get any easier than that?
Today I want to take a look at Chipotle Mexican Grill, Inc. (NYSE:CMG), Chuy’s Holdings Inc (NASDAQ:CHUY) and BJ’s Restaurants, Inc. (NASDAQ:BJRI).
To make this exercise interesting, let’s assume that I took my family out to eat at Chipotle Mexican Grill, Inc. (NYSE:CMG), BJ’s Restaurants, Inc. (NASDAQ:BJRI) and Chuy’s Holdings Inc (NASDAQ:CHUY) and I spent a total of $50 at each restaurant. To determine what each company did with my money, I am looking at their latest income statements and I am dividing each sub-category by revenue. So, for example, Chipotle’s Food and Beverage Expense in thousands ($239,589) / Revenue ($727,017)= .32955 x $50 = $16.48. So, Chipotle used $16.48 of my $50 to pay for the food that my family eats.
Cool? Ok, let’s look at each company using their latest 10Q Income Statement.
Chipotle Mexican Grill, Inc. (NYSE:CMG)
CMG Food and Beverage Expense $16.48 (32.955%)
Labor Expenses $11.79 (23.585%)
Occupancy Costs $3.28 (6.55%)
Other Operating Costs $5.27 (10.544%)
G&A $3.04 (6.0815)
Depreciation Expense $1.57 (3.155%)
Pre-Opening Expenses $0.20 (.397%)
Loss on Disposal of Assets $0.09 (.184%)
Income Tax $3.00 (6.014%)
Net Income $5.27 (10.534%)
BJ’s Restaurants, Inc. (NASDAQ:BJRI)
Cost of Sales $12.25 (24.493%)
Labor $17.44 (34.884%)
Occupancy and Other Operating Costs $10.73 (21.468%)
G&A $3.36 (6.724%)
Depreciation Expense $3.3 (6.068%)
Pre-Opening Expenses $0.19 (.377%)
Interest Expense $0.00265 (.005%)
Income Tax $0.78 (1.55%)
Net Income $2.19 (4.377%)
Chuy’s Holdings Inc (NASDAQ:CHUY)
Cost Of Goods $13.44 (26.89%)
Labor $16.03 (32.068%)
Operating Costs $7.00 (14.02%)
Occupancy Costs $3.09 (6.191%)
G&A $2.99 (5.985%)
Secondary Offering Costs $0.45 (.893%)
Marketing Expenses $0.38 (.754%)
Pre-Opening Expenses $1.04 (2.079%)
Depreciation Expenses $2.11 (4.214%)
Interest Expense $0.03 (.071%)
Income Tax $0.59 (1.18%)
Net Income $2.83 (5.655%)
It should not be a surprise to anyone that Chipotle Mexican Grill, Inc. (NYSE:CMG) is dominating this exercise, since it is by far the largest of the three companies. Its massive size allows Chipotle to spread its corporate expenses, for example, over a larger revenue base.
But this is just one quarter; how do the numbers look over a longer trend? So, now take a look at their latest 10K, which gives a multi-year look at the income statement.
Chipotle Mexican Grill, Inc. (NYSE:CMG)
| 2008 | 2009 | 2010 | 2011 | 2012 | |
| Food and Beverage | $16.21 | $15.35 | $15.28 | $16.27 | $16.31 |
| Labor Costs | $13.18 | $12.68 | $12.35 | $11.96 | $11.75 |
| Occupancy Costs | $3.68 | $3.76 | $3.52 | $3.24 | $3.14 |
| Other Operating Costs | $6.16 | $5.75 | $5.53 | $5.53 | $5.25 |
| G&A | $3.35 | $3.27 | $3.23 | $3.29 | $3.36 |
| Depreciation Expense | $1.98 | $2.02 | $1.88 | $1.65 | $1.54 |
| Pre-Opening Expense | $0.44 | $0.28 | $0.21 | $0.19 | $0.22 |
| Loss on Disposal | $0.35 | $0.20 | $0.17 | $0.13 | $0.09 |
| Income Tax | $1.84 | $2.55 | $3.00 | $2.97 | $3.29 |
| Net Income | $2.94 | $4.18 | $4.88 | $4.74 | $5.09 |
Chipotle Mexican Grill, Inc. (NYSE:CMG) is doing an excellent job of maximizing every dollar of revenue that it receives. As the chart above clearly shows, management has improved from the recession lows of 2008 to a very strong showing for 2012. As the economy continues to improve, management has many years of growth ahead of them. With a current restaurant count of 1488, with only 12 of those being international, they should be able to open another 1,000 in the USA alone over the next decade. Then once management becomes comfortable with their international business plan, 500-600 international locations should not be out of reach as they enter new markets.
